Dow jumps 700 points, Nasdaq rises 2.5% after cool CPI reading

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U.S. stocks edged higher on Wednesday, buoyed by strong expectations for bank earnings and a key consumer inflation report.

The benchmark S&P 500 (^GSPC) popped more than 1.8%, while the Dow Jones Industrial Average (^DJI) rose more than 1.6%, or more than 700 points. Meanwhile, the tech-heavy Nasdaq Composite ( ^IXIC ) rose 2.5 percent.

Stocks edged higher after the Consumer Price Index (CPI) showed progress toward the Fed’s 2 percent inflation target in December.

Prices rose 0.2% on the month in the “core,” which strips out more volatile food and gas costs, adding to November’s 0.3% gain. Core CPI rose 3.2 percent last year.

As of last publication, the annualized core CPI was stuck at a 3.3% gain for the past four months. December is the first time since July that the gauge has shown price growth.

DJI – delayed quote American dollars

^ DJI ^IXIC ^GSPC

The 10-year Treasury yield ( ^TNX ) fell more than 13 basis points to trade at 4.65% after a cooler-than-expected reading. It has reached its highest level in over a year, serving as a headwind for stocks. Interest-rate small-cap Russell 2000 Index (^RUT) rose in response, rising nearly 2%.

Traders still see only a 3% chance the Fed will cut rates in January. The CME FedWatch tool. they It is divided on whether cuts will come in the middle of this year; With the chances of cooling off in June, it’s not seen as likely now.

Read more: What Fed Rate Cuts Mean for Bank Accounts, CDs, Loans and Credit Cards

Spirits also got a boost from Wall Street bank earnings reports, thanks to a revival in communications and investment banking strength. JPMorgan Chase ( JPM ) met bullish analyst expectations with a second consecutive year of record profits, while Goldman Sachs ( GS ) beat profit estimates. BlackRock ( BLK ), Wells Fargo ( WFC ) and BNY ( BK ) also booked defensive quarters.

Live streaming 14 updates

  • Financials lead S&P 500 sectors after strong bank earnings.

    He has led the financial sector by helping several big banks, including JPMorgan ( JPM ) Goldman Sachs ( GS ), Citigroup ( C ) and Wells Fargo ( WFC ), gain traction as investment banking and trading revenues grow.

    Read more about their results here.

  •     Josh Shaffer

    ‘Magnificent 7’ stocks roar on post-CPI rally.

    Amid Wednesday’s massive stock rally, large-cap tech is still the clear leader.

    All seven of the “Magnificent Seven” tech stocks — Apple ( AAPL ), Alphabet ( GOOGL , GOOG ), Microsoft ( MSFT ), Amazon ( AMZN ), Meta ( Meta ), Tesla ( TSLA ), and Nvidia ( NVDA ) — are up more than 1.5%. or were more.

    The Roundhill Magnificent Seven ETF ( MAGS ) is up 3.5%, far surpassing the gains made by the three major averages.

  •     Josh Shaffer

    ‘Too early to call’ on bond yield peak, says portfolio manager

    A drop in the 10-year Treasury yield (^TNX) to 4.65% on Wednesday renewed interest in risk assets.

    But as we’ve been reporting, the 10-year high is driven by a number of factors, not higher inflation expectations. And a positive consumer price index report didn’t give the all-clear on the recent headwind for stocks, Bridge Khurana, fixed income portfolio manager at Wellington Management, told Yahoo Finance.

    Khurrana said it is “still too early” to call bond yields a peak for the time being, adding that if the new Trump administration brings in more fiscal spending than expected, yields could start another high.

    Still, Khurana described Wednesday’s market action as “a welcome development for the bond market.”

    “There are two-way dangers in booking products,” Khurana said. “It’s not just one way.”

  •     Josh Shaffer

    Inflation data is proving Jerome Powell right.

    Wednesday’s better-than-expected inflation reading was a particularly hopeful sign for the Federal Reserve.

    The accommodation index showed a price increase of 4.6% compared to last year, the lowest level since January 2022. While the index is still higher, one of the stickier elements of inflation history over the past several years has continued to show growth for the Federal Reserve chairman. Jerome Powell recently discussed it in press conferences.

    On Dec. 18, “Inflation in housing services, which we were most concerned about, has actually come down now, at a slower pace than we thought…but it’s coming down steadily.” .

    Further improvement in sticky inflation like housing is why some economists believe interest rates will remain on the table through 2025.

    “The slowdown of the past few months is what (Powell) is talking about, and should give the FOMC more confidence that they will continue to cut rates this year, albeit with a short-term pause,” Jefferies U.S. economist Thomas Simon wrote in a note to clients on Wednesday.

    Read about accommodation inflation here.

  •     Josh Shaffer

    Bitcoin is close to $100,000, following a broad market rally

    Bitcoin (BTC-USD) rallied after a soft inflation reading Wednesday morning, to reach just shy of $99,000.

    Following the movement of the broader market, the world’s largest cryptocurrency is a trend that has emerged in recent weeks.

    Read more from Yahoo Finance’s Ethan Wolf-Man on what’s driving bitcoin prices recently here.

  •     Josh Shaffer

    Jamie Dimon’s ‘fundamental case’ for his resignation as CEO of JPMorgan comes after just a few years.

    Tuesday’s shakeup at JPMorgan ( JPM ) raised questions that CEO Jamie Dimon would step down.

    Probably not anytime soon, the bank’s chief said Wednesday.

    As David Hollerith of Yahoo Finance reports:

    Jamie Dimon agreed with analysts’ assessment Wednesday that his “fundamental case” for stepping down as JPMorgan Chase ( JPM ) CEO is a few years from now.

    The comments come a day after the nation’s largest bank announced a management overhaul that raised new questions about the race to replace Dimon, 68.

    Read more here.

  • Innes Faire

    Oil prices rose 2% as commodities fell for the eighth consecutive week

    Oil prices rose on Wednesday as US crude fell for an eighth straight week.

    West Texas Intermediate (CL=F) rose more than 2.5% to trade at $79.50 a barrel, while Brent (BZ=F), the international benchmark, rose 2% to hover above $81.

    U.S. crude output fell to 1.96 million barrels last week, the lowest level since April, according to Energy Information Administration data released on Wednesday. Meanwhile, gasoline stocks reached the highest level in a year.

    Crude rose after the United States announced broad sanctions on oil producer Russia to cut off Moscow’s income from the ongoing war in Ukraine.

  •     Josh Shaffer

    There is still a way to cut interest rates in 2025.

    Last Friday, the warmer-than-expected December jobs report unnerved the market and introduced talk of the Federal Reserve not cutting interest rates at all, or possibly raising interest rates at some point.

    Mainly, economists argued that the focus has intensified on whether inflation will begin to show signs of softening, prompting the Fed to cut interest rates in 2025. Early evidence of that trend came in Wednesday’s release of the Consumer Price Index (CPI).

    According to the more flexible “core” of food and gas costs, the price increased by 3.2% compared to last year. This marked the first downward movement in the core CPI since July.

    While economists don’t believe this data will prompt the Federal Reserve to cut interest rates at its January meeting, many see a rate cut in 2025.

    Citi economist Veronica Clark wrote in a note to clients on Wednesday that markets had “overestimated the stickiness of inflation.”

    “The December data should be encouraging for further (Fed) easing, with many components largely as expected and consistent with pre-pandemic norms,” ​​Clark wrote.

    “Weak inflation should give the Fed more confidence,” wrote Morgan Stanley’s US economist Michael Gapen. “This publication is consistent with our request for a price cut in March.”

  •     Josh Shaffer

    Profits rose at JPMorgan.

    JPMorgan ( JPM ) shares were trading above a flat line on Wednesday despite a big gain for America’s largest bank.

    As David Hollerith of Yahoo Finance reports:

    Last year, JPMorgan Chase ( JPM ) went bust. More profit $14 billion in revenue in the last quarter of 2024, more than ever before.

    Its full-year profit rose to $58 billion, an all-time record for JPMorgan and the largest in U.S. banking history. Fourth-quarter profits were up 50% from the year-earlier period.

    The results were boosted by gains in JPMorgan Wall Street’s operations as deals are returning to the industry following a two-year drought. JPMorgan Investment Bank’s revenue rose 49 percent from a year ago.

    Read more here.

  •     Josh Shaffer

    Green sea on the open

    Stocks held a broad rally at the opening of Wednesday’s trading session on Wall Street.

    All 11 sectors were in the green, with interest-rate sectors such as real estate ( XLRE ) and utilities ( XLU ) leading the charge. Five sectors outperformed the S&P 500s (^GSPC) with a 1.3% gain.

  •     Josh Shaffer

    The bond yield takes its breath away

    A recent headwind for the stock died on Wednesday morning.

    The 10-year Treasury yield ( ^TNX ), which was at its highest in more than a year, fell more than 12 basis points to 4.66% on better-than-expected consumer inflation.

    Meanwhile, stocks rallied, with futures tied to the major averages all up 1.5% or more.

  •     Josh Shaffer

    The latest CPI data showed that price increases were lower than expected in December.

    New consumer inflation data released Wednesday showed a smaller-than-expected rise in prices in December.

    Consumer Price Index Data Data from the Bureau of Labor Statistics showed that on a “core” basis — which excludes more volatile food and gas costs — prices rose 0.2% month over month. This was less than the 0.3% expected by economists.

    On the year, core prices rose 3.2%, below the 3.3% economists had forecast. It is the first move to a benchmark low since July.

    The headline CPI rose 2.9% in December from a year earlier, compared to a 2.7% increase in November but in line with economists’ estimates. The index rose 0.4% from the previous month, up from a 0.2% increase in November and matching economists’ estimates.

  • Jenny McCall

    good morning. Here’s what’s happening today.

  • Brian Sozzi

    An interesting morning read on global disasters

    Yours truly is gearing up for another week of important reporting at the World Economic Forum in Davos, Switzerland, which begins next Monday. I have a lot to say about what we do there in this Sunday morning newsletter.

    I was quick to note that a source familiar with the matter told me that President Trump will be speaking via video feed on Thursday within days of his inauguration (and possibly more executive orders).

    But before that exciting time I thought of the WEF. Annual international risk report It was an interesting read that came down this morning. The biggest risk is “state-based armed conflict.” Other major concerns are disinformation and disinformation (Zuck better stop fact-checking on meta from now on…), extreme weather events, societal polarization, cyber-espionage, and war.

    Thinking of these many risks is not worth it in Mag 7 shares!

    In a statement, WEF Managing Director Mirek Dušek said: “Rising geopolitical tensions and erosion of trust are driving the global risk landscape.” “In this complex and dynamic context, leaders have a choice: find ways to foster collaboration and resilience, or face complex vulnerabilities.”